Data Cash Systems, Inc. v. JS&A Group, Inc., et al.
No. 79 C 591
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION
480 F. Supp. 1063; 1979 U.S. Dist. LEXIS 9552; 203 U.S.P.Q. (BNA) 735
September 26, 1979
OPINION BY: FLAUM
MEMORANDUM OPINION
This action for copyright infringement and unfair competition is brought by the creator of
a computer program against the corporations and the officers of these corporations which
are allegedly reproducing, importing, distributing, selling, marketing and advertising
copies of plaintiff's computer program. Plaintiff has filed a motion for a preliminary
injunction and defendants JS&A Group, Inc. ("JS&A"), Joseph Sugarman
("Sugarman"), and Mary Stanke ("Stanke") have filed a motion for
summary judgment. For the reasons set forth below, the motion of defendants JS&A,
Sugarman and Stanke for summary judgment is granted on Count I of the First Amended
Complaint for Infringement of Copyright and for Unfair Competition (the "First
Amended Complaint") and is denied on Count II of the First Amended Complaint and the
motion of plaintiff for a preliminary injunction is denied.
Before discussing the facts in this case, it is necessary to set forth what exactly a
computer program is. A computer program has been defined generally as a set of precise
instructions that tells the computer how to solve a problem. C. J. Sippl & C. P.
Sippl, Computer Dictionary 333 (2d ed. 1974); Synercom Technology, Inc. v. University
Computing Co., 462 F. Supp. 1003, 1005 (N.D.Tex.1978). Normally, a computer program
consists of several phases which may be summarized as follows. The first phase is the
development of a flow chart which is a schematic representation of the program's logic. It
sets forth the logical steps involved in solving a given problem. The second phase is the
development of a "source program" which is a translation of the flow chart into
computer programming language, such as FORTRAN or COBOL. Source programs may be punched on
decks of cards or imprinted on discs, tapes or drums. The third phase is the development
of an "assembly program" which is a translation of the programming language into
machine language, I.e., mechanically readable computer language. Unlike source programs,
which are readable by trained programmers, assembly programs are
virtually unintelligible except by the computer itself. Finally, the fourth
phase is the development of an "object program" which is a conversion of the
machine language into a device commanding a series of electrical impulses. Object
programs, which enter into the mechanical process itself, cannot be read without the aid
of special equipment and cannot be understood by even the most highly trained programmers.
J. Brown & R. Workman, How a Computer System Works 149-175 (1976); Keplinger, Computer
Intellectual Property Claims: Computer Software & Data Base Protection, 1977 Wash.L.Q.
461, 464; M. Pope & P. Pope, Protection of Proprietary Interests in Computer Software,
30 Ala.L.Rev. 527, 530-31 (1979).
Thus, at some point in its development, a computer program is embodied in material form
and becomes a mechanical device which is engaged in the computer to be an essential part
of the mechanical process. At different times, then, a given program is both
"source" and "object". The "source program" is a writing
while the "object program" is a mechanical tool or machine part.
In this case plaintiff retained an independent consultant, D. B. Goodrich and Associates,
to design and develop a computer program for a computerized chess game, CompuChess,
which was to be manufactured and sold by plaintiff. From September 1976 to April 1977 D.
B. Goodrich and Associates designed and developed the basic instructions which told the
computer how to play chess at six different levels of difficulty. This process involved
the four phases in the development of a computer program discussed above. The instructions
were translated into programming language, the source program, which then was translated
into machine language, the assembly program. This assembly program was then used to create
the object program, the Read Only Memory (the "ROM"). This ROM was then
installed in the computer as part of its circuitry.
Thus, CompuChess is a hand-held computer which uses keyboard and data display devices to
input and output information. The human player enters his move on the keyboard device by
pressing certain keys and the computer relays its move on the data display device by
displaying certain letters and numbers.
In late 1977 plaintiff began to market the CompuChess. No copyright notice appeared
anywhere on the ROM, the CompuChess itself, its packaging, or its accompanying literature.
The copyright notice did appear, however, on the source program and all copies thereof. In
November of 1978 the source program was filed with the Register of Copyrights and on
November 28, 1978 a Certificate of Copyright Registration was issued to plaintiff.
In late 1978 defendants JS&A, Sugarman and Stanke began marketing the JS&A Chess
Computer. The ROM in the JS&A Chess Computer is identical to the ROM in plaintiff's
CompuChess. In early 1979 plaintiff filed this action for copyright infringement and
unfair competition.
Where, as here, the pleadings, depositions, answers to interrogatories and affidavits show
that there is no genuine issue as to any material fact, then summary judgment should go to
the party entitled to judgment as a matter of law. However, motions for summary judgment
in copyright infringement and unfair competition cases have been generally frowned upon. 6
Moore's Federal Practice PP 56.17(14) and 56.17(71) (2d ed. 1976). Nevertheless, such
motions may be granted for the defendant in a copyright infringement action if, after
assuming copying, the court finds that any similarity between the works is insubstantial
or that undisputed facts raise a complete defense as a matter of law. 3 Nimmer on
Copyright § 12.10 (1979); Musto v. Meyer, 434 F. Supp. 32, 36 (S.D.N.Y.1977).
Since the ROM in the JS&A Chess Computer is identical to the ROM in plaintiff's
CompuChess, the court can assume that there was direct copying of plaintiff's ROM.
However, the undisputed facts show that defendants JS&A, Sugarman and Stanke have a
complete defense as a matter of law with respect to plaintiff's claim of copyright
infringement.
Count I of the First Amended Complaint, the count alleging copyright infringement by
defendants JS&A, Sugarman and Stanke, is brought under the Copyright Act of 1976, 17
U.S.C. § 101 Et seq. (App.1976) (the "1976 Act"). Although this action should
be brought under the 1976 Act, the 1976 Act itself does not apply. Section 117 of the 1976
Act states:
"this title (title 17) does not afford to the owner of copyright in a work any
greater or lesser rights with respect to the use of the work in conjunction with automatic
systems capable of storing, processing, retrieving, or transferring information, or in
conjunction with any similar device, machine or process, than those afforded to works
under the law, whether title 17 or the common law or statutes of a State, in effect on
December 31, 1977, as held applicable and construed by a court in an action brought under
this title."
The legislative history for section 117 explains that this section was enacted because
the problems in the area of computer uses of copyrighted works are not sufficiently
developed for a definitive legislative solution. Thus, the purpose of section 117 is to
preserve the Status quo. It is not intended to cut off any rights that existed on December
31, 1977 or to create new rights that might be denied under the predecessor to the 1976
Act, the Copyright Act of 1909, 17 U.S.C. § 1 (1976) (the "1909 Act"), or under
common law principles applicable on December 31, 1977. H.R.Rep.No.94-1476, 94th Cong., 2d
Sess. 116, Reprinted in (1976) U.S.Code Cong. & Admin.News, pp. 5659, 5731.
Therefore, a court, in deciding the scope of exclusive rights in the computer area, first
must determine the applicable law, whether state statutory or common law or the 1909 Act.
After determining which law is applicable, the court's decision must depend upon its
interpretation of what that law was on December 31, 1977. H.R.Rep.No.94-1476, 94th Cong.,
2d Sess. 116, Reprinted in (1976) U.S.Code Cong. & Admin.News, p. 5731. If, as of the
date of the alleged act of infringement, the computer program allegedly infringed had been
neither published nor registered in the copyright office, then the common law copyright
rule should be applied. Otherwise, the law under the 1909 Act should be applied. 1 Nimmer
on Copyright § [**10] 2.08(D), at 2-106 (1979).
Prior to the complete revision of the 1909 Act, the American law of copyright had been the
subject of a dichotomy between federal and state law. Unpublished works were automatically
protected by state law, referred to somewhat inaccurately as common law copyright. Such
protection began at the moment of creation and terminated upon publication when common law
copyright was lost. Thereafter, protection was available, if at all, only through federal,
or as it is generally known, statutory copyright. 1 Nimmer on Copyright § 2.02, at 2-16
(1979).
The parties have assumed that the ROM is a "copy" of the computer program
created by plaintiff within the meaning of both the common law and the 1909 Act. The court
does not agree. Both at common law and under the 1909 Act, a "copy" must be
in a form which others can see and read.
At common law the author's property in his unpublished work included the right to publish,
or to refrain from publishing, at his option, and the right of restraining others from
publishing without his consent. The original manuscript and the incorporeal right of first
publication were the private and exclusive property of the author. He had the sole right
of first printing and publishing it for sale. Thus, the unauthorized publication of an
author's work was a violation of the author's common law right to the "copy". H.
Ball, The Law of Copyright and Literary Property § 4 (1944).
At common law the noun "copy" signified a tangible object that was a
reproduction of the original work. Although any mode of reproduction, whether by printing,
writing, photography, or by some other method not yet invented, constituted a copying, to
be a "copy" there must have been an appeal to the eye. Thus, the term
"copy" has been defined as that which comes so near to the original as to give
to every person seeing it the idea created by the original. 18 Am.Jur. Copyright &
Literary Property § 94 (1965) (quoting Boosey v. Whight, (1900) 1 Ch. 122).
That the ROM at common law does not constitute a copy of plaintiff's computer program is
supported by the cases which hold that a completed building is not a copy of the
architectural plans upon which the building is based. E.g., Nucor Corp. v. Tennessee
Forging Steel Service, Inc., 476 F.2d 386, 391 n. 8 (8th Cir. 1973); Smith v. Paul, 174
Cal.App.2d 744, 345 P.2d 546, 553 (1959). An architectural plan is a technical writing
which is capable of being copied only by similar technical writings, I.e., by other plans.
A building is the result of plans not a "copy" of them. Nucor Corp. v. Tennessee
Forging Steel Service, Inc., 476 F.2d at 391 n. 8 (quoting Katz, Copyright Protection of
Architectural Plans, Drawings & Designs, 19 L. & Contemp.Prob. 224, 236 (1954)).
It follows that at common law a copy of a computer program is another computer program in
its flow chart or source phase because these are comparable technical writings. While the
ROM is the mechanical embodiment of the source program, it is not a "copy" of
it.
This same conclusion is reached under the 1909 Act. The 1909 Act and its predecessors gave
authors the exclusive right, Inter alia, to copy the copyrighted work. 17 U.S.C. § 1(a)
(1976). In White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S. Ct. 319, 52
L. Ed. 655 (1908), the Supreme Court held that a piano roll was not a "copy" of
the musical composition recorded thereon and therefore, that the defendant, in making an
unauthorized piano roll of plaintiff's musical composition, had not infringed plaintiff's
"right to copy". After quoting the definition of copy set forth in Boosey v.
Whight, the Supreme Court defined a copy of a musical composition as "a written or
printed record of it in intelligible notation". 209 U.S. at 17, 28 S. Ct. at 323. In
reaching this result the Court stated:
"It may be true that in a broad sense a mechanical instrument which reproduces a tune
copies it; but this is a strained and artificial meaning. When the combination of musical
sounds is reproduced to the ear it is the original tune as conceived by the author which
is heard. These musical tones are not a copy which appeals to the eye. In no sense can
musical sounds which reach us through the sense of hearing be said to be copies as that
term is generally understood, and as we believe it was intended to be understood in the
statutes under consideration." 209 U.S. at 17, 28 S. Ct. at 323.
Noting that the perforated rolls were parts of a machine which, when duly applied and
properly operated in connection with the mechanism to which they were adopted, produced
musical tones in harmonious combination, the Supreme Court concluded that they were not
"copies" within the meaning of the copyright act then in existence.
Congress in the 1909 Act implicitly adopted the White-Smith definition of
"copy". 1 Nimmer on Copyright § 2.03(B), at 2-29 (1979). Thus, since the ROM is
not in a form which one can "see and read" with the naked eye, it is not a
"copy" within the meaning of the 1909 Act. In its object phase, the ROM, the
computer program is a mechanical tool or a machine part but it is not a "copy"
of the source program. n9
Dicta in Synercom Technology, Inc. v. University Computing Co., 462 F. Supp. 1003
(N.D.Tex.1978), supports this conclusion. There suit was brought for copyright
infringement of instruction manuals and input formats used with a computer program
designed to solve engineering problems incident to the analysis of building structures.
The plaintiff argued that the sequencing and ordering of data was the expression of an
idea, not the idea. After rejecting this argument, the court observed that
the formulation of the problem (to be solved) in sufficient detail and with sufficient precision to enable it to be converted into an unambiguous set of computer instructions requires substantial imagination, creativity, independent thought, and exercise of discretion, and the resulting program can in no way be said to be merely a copy or version of the problem statement. The program and the statement are so different, both in physical characteristics and in intended purpose, that they are really two different expressions of the same idea, rather than two different versions of the same expression. 462 F. Supp. at 1013 n.5.
Even assuming that the ROM in plaintiff's CompuChess was copied by defendants JS&A,
Sugarman and Stanke, the ROM is not a "copy" of plaintiff's computer program and
therefore the copying is not actionable. Since a complete defense as a matter of law with
respect to plaintiff's claim of copyright infringement exists, the motion of defendants
JS&A, Sugarman and Stanke for summary judgment is granted on Count I of the First
Amended Complaint.
In Count II of the First Amended Complaint, it is alleged that defendants JS& A,
Sugarman and Stanke have engaged in unfair trade practices and unfair
competition against plaintiff by importing, distributing, selling, marketing and
advertising as its own copies of plaintiff's ROM. Although the facts are undisputed,
defendants JS&A, Sugarman and Stanke have not shown that they are entitled to judgment
as a matter of law.
While the rule may once have been otherwise, unfair competition is not confined to the
passing off of the goods of one for those of another and the "palming off"
theory is no longer the sole and exclusive criterion in determining the right to relief
against unfair competition. There may be unfair competition by misappropriation as well as
by misrepresentation, that is, the doctrine of unfair competition has been extended to
permit the granting of relief in cases where there was no fraud on the public but where
one, for commercial advantage, has misappropriated the benefit or property right of
another and has exploited a competitor's business values. 87 C.J.S. Trade-Marks,
Trade-Names and Unfair Competition § 13 (1954); R. Callmann, The Law of Unfair
Competition, Trademarks & Monopolies § 60.3 (3d ed. 1968); International News Service
v. Associated Press, 248 U.S. 215, 39 S. Ct. 68, 63 L. Ed. 211 (1918).
Defendants JS&A, Sugarman and Stanke attempt to rebut plaintiff's argument that they
misappropriated plaintiff's ROM by relying on two Supreme Court decisions, Compco Corp. v.
Day-Brite Lighting, Inc., 376 U.S. 234, 84 S. Ct. 779, 11 L. Ed. 2d 669 (1964), and Sears,
Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S. Ct. 784, 11 L. Ed. 2d 661 (1964).
The following statement in Compco capsulizes the two decisions:
"Today we have held in Sears . . . that when an article is unprotected by a patent or a copyright, state law may not forbid others to copy that article. To forbid copying would interfere with the federal policy, found in Art. I, § 8, cl. 8, of the Constitution and in the implementing federal statutes, of allowing free access to copy whatever the federal patent and copyright laws leave in the public domain."
376 U.S. at 237, 84 S. Ct. at 782. Thus, defendants JS&A, Sugarman and Stanke in
essence are arguing that International News Service has been overruled Sub silentio by
Sears and Compco.
However, Goldstein v. California, 412 U.S. 546, 93 S. Ct. 2303, 37 L. Ed. 2d 163 (1973),
indicates that Sears and Compco did not overrule International News Service and the
misappropriation doctrine. R. Callmann, The Law of Unfair Competition, Trademarks &
Monopolies § 61.1 (3d ed. Supp.1978). In Goldstein a California statute making it a
criminal offense to pirate recordings produced by others was challenged and the Supreme
Court held Inter alia that the California statute did not violate the Supremacy
Clause of the Constitution. In so holding, the Supreme Court distinguished Sears and
Compco from Goldstein on the grounds that in Sears and Compco the state was giving
protection which conflicted with the objectives of the federal patent laws while in
Goldstein the state was giving protection which did not conflict with any federal law.
Since Congress had left the area of sound recordings unprotected, the state was free to
act. Thus, states may prohibit the misappropriation of a property right or a commercial
advantage of another. R. Callmann, The Law of Unfair Competition, Trademarks &
Monopolies § 60.4(c) (3d ed. 1968).
Since unfair competition is a tort, it is governed by the law of the state which has the
most significant relationship to the occurrence and to the parties. Restatement (Second)
of Conflict of Laws § 145 (1971); Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593, 595
(1970). In unfair competition cases the principal location of the defendant's conduct is
the contact that usually is given the greatest weight in determining the state which has
the most significant relationship. Restatement (Second) of Conflict of Laws § 145,
comment f (1971). Thus, with respect to defendants JS&A, Sugarman and Stanke the law
of Illinois controls.
Cases in Illinois indicate that the doctrine of unfair competition has been extended in
Illinois to permit relief where one for commercial advantage has misappropriated the
property of another. E.g., Capitol Records, Inc. v. Spies, 130 Ill.App.2d 429, 264 N.E.2d
874 (1st Dist. 1970). Since the court does not know exactly how the ROM in the JS&A
Chess Computer was created, it cannot determine at this time whether defendants' actions
constituted unfair competition. Since the undisputed facts presently before the court do
not establish that defendants JS&A, Sugarman and Stanke are entitled to judgment as a
matter of law, their motion for summary judgment is denied on Count II of the First
Amended Complaint.
In order to obtain a preliminary injunction to restrain the unfair competition of
defendants JS&A, Sugarman and Stanke, plaintiff must establish a reasonable
probability of success on the merits, irreparable injury, the lack of serious adverse
effects on others, and sufficient public interest. Ekanem v. Health & Hospital Corp.
of Marion County, 589 F.2d 316, 319 (7th Cir. 1978). Here plaintiff has failed to
establish any of these four factors.
Firstly, plaintiff has not established that there is a reasonable probability of success
on its claim of unfair competition because it can only speculate as to how the ROM in the
CompuChess was duplicated. Thus, at this point in time, the court is unable to determine
that there is a substantial likelihood that plaintiff will prevail on the merits.
Secondly, plaintiff has failed to show that it will be irreparably harmed if the
injunction does not issue. Plaintiff contends that if a preliminary injunction does not
issue, it will suffer lost profits, other damages and injury to its good will and
business reputation. However, plaintiff has an adequate remedy at law if it has suffered
lost profits and other money damages as a result of the actions of defendants JS&A,
Sugarman and Stanke. Plaintiff's conclusory statements that its reputation and good will
have been damaged do not establish that plaintiff has been irreparably harmed.
Thirdly, the threatened injury to plaintiff may not outweigh the threatened harm to
defendants JS&A, Sugarman and Stanke if they are enjoined from reproducing, importing,
distributing, selling, marketing and advertising the JS&A Chess Computer. The injury
to plaintiff if the preliminary injunction does not issue is a decrease in sales
while the injury to defendants JS&A, Sugarman and Stanke if the preliminary injunction
does issue is an elimination of sales altogether.
Finally, plaintiff has not convinced the court that the public interest will be served if
a preliminary injunction issues. Generally, the public interest is served by freedom of
trade and business competition. Absent a showing as to exactly how the ROM in the
CompuChess was duplicated, this court does not believe it is in the public interest to
enjoin defendants JS&A, Sugarman and Stanke from reproducing, importing, distributing,
selling, marketing and advertising the JS&A Chess Computer. Therefore, plaintiff's
motion for a preliminary injunction to restrain the unfair competition of defendants
JS&A, Sugarman and Stanke is denied.
Accordingly, the motion of plaintiff for a preliminary injunction is denied and the motion
of defendants JS&A, Sugarman and Stanke for summary judgment is granted on Count I of
the First Amended Complaint and is denied on Count II of the First Amended Complaint.
It is so ordered.